Hi I’m a new knitter and I’m working on a sweater but I have my second item that I’m going to be knitting all figured out. It says to use a 10 1/2" and an 11" inch circular needle. The yarn they have me using is VERY EXPENSIVE and is 100% cashmere and I want to go cheaper for the yarn but I don’t know how to decide how to choose the right yarn because I know size is very important. Please help me.
I would suggest alpaca. It’s beautiful and very soft and less expensive. Or a wool/cashmere blend.
You can check yarndex.com and search for yarns in comparable weights.
cam
Somewhere at the beginning of the pattern it will tell you the guage; something like this: 22 stitches = 4". You want to find a yarn that you gives you the same guage. You may need a smaller or larger needle, but you want to get the same stitches per inch with your new yarn.
http://www.yarnstandards.com/weight.html
Using the info that Mirl56 was talking about (the gauge) you can look up which yarn is that right size. For instance, using that example, 22 stitches=4 inches would fall under 3 light, DK, light worsted. That’s what it may have on the wrapper. So just have stitches per inch. and yarndex is a GREAT place to find other yarns.
So basically what you’re saying is my pattern says 25 stitches and 28 rows to 8" in stockinette stitch and i’m using a 10.5 and 11" circular needle so I should look for a number 2 fine? The yarn they want me to use is filatura di crosa scozia which is in this link. WEBS - America's Yarn Store | Knitting, Crochet, Weaving & Spinning Supplies | Yarn.com at WEBS | Yarn.com. Can you please look to make sure that the 2 fine is correct? This cape is supposed to be 45" wide and 54" long in case that helps.
Also when you look on the link it says on the right hand says that it’s bulky weight so should I use a 5 instead of a 2 fine. I’m just trying to understand 
my pattern says 25 stitches and 28 rows to 8" in stockinette stitch
Most gauge/tension is established over 4" or 10 cm…which is half of yours. So you’re looking for 12.5 sts/14r (over 4"). Or 3.125 sts/in.
With that in mind it might make your search easier.
cam
The pattern says 25 stitches in 8 inches, the site I gave is in 4 inches, so the pattern in 4 inches is 12.5, just what 5 or bulky says. So that’s what you want. Make sure you check your gauge first too. You may need to go up or down a needle size if you knit tighter or looser than the designer and yarn within one size can vary too. But bulky yarn will get you very close if not spot on…
Based on that it says to use a 5 so is that correct? So if I use any 5 I’ll be alright?
Yes… just check your gauge first. But yes go with bulky size yarn.